Tax all digital services or none, committee hears

OTTAWA — Witnesses in the latest round of hearings in the House of Commons’ Canadian Heritage committee’s study of the media and local communities asked parliamentarians to level the playing field when it comes to taxes on digital services. “Currently, foreign suppliers of digital products and services, such as online news and entertainment services, music, movies and software, are not required to collect or remit HST and provincial sales tax as similar Canadian firms are obliged to do,” Bernard Lord, president and CEO of the Canadian Wireless Telecommunications Association (CWTA), told the committee Tuesday morning. “The competitive advantage given to foreign suppliers by this policy undermines Canadian investment in innovation by encouraging Canadians to spend more money outside of the Canadian economy to the detriment of Canadian suppliers and workers.” Foreign providers receive an advantage of up to 15 per cent over Canadians, Lord said, adding that it was a holdover from when “sales of such products and services were relatively miniscule and effective taxation was more trouble than it was worth.” He added: “Those days are gone.” The CWTA, along with representatives from Cogeco Inc., the Canadian Newspaper Association and an Italian-language newspaper, told the committee they wanted equality in the taxation sphere, either by having foreign players taxed, or by removing the tax for Canadian companies. “I think that nothing would prevent Canada from establishing a structure that would lead to normal taxation to tax goods and services, for example provincial sales tax, that could be legitimately implemented and that would be a good first step,” Louis Audet, Cogeco president and CEO, said. “The government must have the taxation powers it needs, as it does for any other provider of goods and services throughout the country regardless of what good or service is sold.” “We need to get some equitability here,” Joseph Volpe, a former Liberal MP and current publisher and president of Corriere Canadese, said. Canadians have an “insatiable appetite” for digital media, including movies, music, TV shows and games, said Lord, which makes “closing this tax loophole more important than ever.” “I can’t imagine anyone openly promoting a sales tax advantage for American-made cars,” Lord said, also using the example of Canadians having to pay sales tax on online subscriptions to domestic newspapers and not for international ones, such as the Wall Street Journal. Committee witnesses also spoke about the regulatory environment, with Cogeco’s Audet expressing his concern with the recently adopted legislation in Quebec to ban illegal online gambling websites. “Throughout the entire world, democratic countries are not regulating content on the Internet because they understand that it is a danger to democracy and the free circulation of ideas,” Audet said. Lord also repeated the CWTA’s call for “smart regulation,” with the federal government retaining the sole responsibility. “Consumers, service providers, regulators and elected officials are all better served by a proportionate and symmetrical set of federal regulations rather than an asymmetrical and inefficient patchwork of different provincial frameworks,” Lord said. — With reporting by Charelle Evelyn at cevelyn@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Tax all digital services or none, committee hears

Broadcast | May 31, 2016

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Tax all digital services or none, committee hears

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